Wednesday January 15 2014

ERA reduces power tariffs



Government yesterday announced new power tariffs with a negligible reduction in end user tariffs.

The regulator, Electricity Regulatory Authority (ERA), announced a Shs4 (o.8 per cent) from Shs524.5 to Shs520.4 for domestic consumers and Shs487.6 for commercial consumers to Shs474.4. The tiny reduction will, however, be subject to variation in fuel prices, the exchange rate and inflation.

Power distributors have been calculating bills using a fixed rate method, but the 2014 new billing system would mean that in addition to the fixed rate, inflation, the exchange rate and increase in fuel prices will be considered and added onto the electricity charges.

Announcing the new tariffs, ERA chairperson Richard Santo Apire, said the approved tariffs which take effect tomorrow (Thursday) shall be subject to a quarterly adjustment determined in accordance with an approved methodology.

“These new tariffs are subject to change owing to changes in global fuel prices which affect UETCL’ costs of purchasing power from IPPs with fossil-fired electricity generation, and foreign exchange regime which affects all companies involved in supplying power,” he added.
Mr Apire remarked that the 2014 end-user tariffs are a culmination of a tariff review process that started with the submission of applications by Umeme, Eskom, UETCL, and UEDCL.

Sole power distributor Umeme Ltd had proposed that the end-user tariffs for domestic consumers be increased by 9.95 per cent in 2014, citing the need to invest in expanding its network and also meet the power purchase costs.

ERA officials said they did not receive any objection from the public to Umeme’s applications for adjustments even when they advertised calling upon the public for comments.
The Authority also announced yesterday an increase in the price of the first 15 units consumed from Shs100 to Shs150.

This increase, ERA said would cater for the cost of running thermal plants in the absence of subsidy from government. The government also expects to spend Shs59.5 billion on thermal plants throughout the year to supplement the 516MW hydro-electric generated capacity.

Comment > Nelson Wesonga

ERA has “reduced” end-user tariffs by Shs4 - for each unit consumed by a domestic consumer, Shs13.2 per unit consumed by a commercial consumer and by Shs2.4 per unit consumed by any large industrial consumer.

I have picked on the three because (1) there are more domestic consumers - 500000 of Umeme’s 540000 (2012 statistics) are domestic customers; (2) the commercial, industrial consumers and government departments consume 70 per cent of the electricity.

Noteworthy, too, is that ERA has increased the charge for each of the first 15 units that one uses from Shs100 to Shs150! That means a poor man - and I believe there are “a few others” like me - who use averagely 20 units in a month, will save only Shs28 per month.

For those who want to celebrate the reduction, just wait until April when the exchange rate fluctuations and the price of imported oil and inflation shall be factored in the tariff.
[Wesonga is Daily Monitor’s Chief Correspondent on the Energy Sector]